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Is Vendor Management Holding Credit Unions Back?

Technology is rapidly changing the way credit unions do
business, with new solutions at every turn. However, sometimes finding these
new solutions can be difficult. To find a new vendor, the burden is on the
credit union to do the necessary research, find the solutions that look best
for them, vet the new company and more. This presents a challenge for any
financial institution that wants to find a more efficient vendor or bring on a
new one that offers an innovative product or service.

Searching and researching

Whether credit unions are looking to replace an old vendor
that they are not satisfied with or simply bring on a new and innovative
service, the long process of vendor selection begins with research. Since there
is not a service like Yelp or Angie’s List for credit union vendors, credit
unions must track down solutions and companies based on their own research. Currently,
financial institutions do not have easy access to information on what it may be
like to work with a vendor. Whether it be via internet searches or simply
talking to others in the industry, the process of digging up important
information on vendors takes time and diligent effort on the part of the credit

Simplifying with data

This process can take months, depending on the resources
available to them. For many credit unions, they do not have the luxury of extra
time and resources to spend on this search process. This is why credit unions
must partner with technology companies that can provide them with the information
they are looking for, giving them a level of transparency they would not have

Though there is not a site like Yelp where others can leave
their reviews, credit unions can tell a lot about a vendor just by looking at
some key data points. Instead of having to gather information on vendor
performance, pricing and so on from multiple sources, having easy access to
information about the vendor through a technology partner could be just the
solution they need. Knowing how quickly a vendor works, how much they really
cost, etc. can be crucial in saving credit unions time in their search.

Having their hands on data about outside vendors can also
aid the credit union in seeing how their current ones measure up. Seeing how
current vendors compare to the competition can really help a credit union
decide if they should make a change or not. Cutting down the amount of time it
takes to research and onboard a new vendor can open so many opportunities for
credit unions to bring on new and innovative technology solutions that not only
make their jobs easier, but make member’s lives easier, as well.

Making the most of limited resources

This process of vendor selection can be a burden for smaller
institutions or those that may not have the additional resources necessary to
take on this task. Credit unions can often struggle with this process, since
many do not have the extra manpower or funds that are required for a successful
search and implementation.

Unfortunately, this factor is holding credit unions back
from not only bringing on new and innovative solutions for members, but it is
also deterring them from making a change when a current vendor is

Take lending for example. A certain vendor could have
promised the credit union property reports within three days, but they might
end up taking four or five. This vendor is slowing down the entire mortgage
lending process for the credit union. Even when the vendor might be the one
thing standing in the way of greater efficiency in the lending process, the
credit union might choose not to swap to a faster vendor simply because the
process of finding and bringing on someone new is just too long and difficult.

Regulatory compliance is also another burden that falls on
the credit union. A vendor that might be risking the credit union’s regulatory
compliance can cause a lot of issues – ones that must be addressed swiftly. Credit
unions must be able to more readily change to a vendor that they can ensure
meets their guidelines and keeps both members and the credit union compliant
and safe.

The process of selecting, implementing and managing vendors
can be tricky and time consuming, but partnering with a technology company could
be the only thing credit unions need to simplify the process. Having a partner
that tracks performance on a variety of vendors frees up time and manpower for
the credit union. With greater transparency about vendor data, credit unions
will be more easily able to improve and innovate.

Jorge Ponce is Director of Product and Vendor Management at Austin, Texas-based FirstClose, a highly respected provider of best-in-class property & borrower data intelligence and settlement services nationwide.

This content is for CU BUSINESS eMagazine + WEB ACESS and THE TEAM BUILDER (GROUP SUBSCRIPTION) members only.
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